1-800-Flowers plans layoffs, posts loss

Florist and gift retailer 1-800-Flowers.com Inc. on Thursday posted a fiscal second-quarter loss, reversing a year-ago profit, as the company recorded a big charge related to a big write-down in one of its business segments.

The company also said it will increase cost-cutting measures with the aim of saving $50 million in the next fiscal year.

For the quarter ended Dec. 28, 1-800-Flowers said it lost $5.1 million, or 8 cents per share, compared with a profit of $19.3 million, or 29 cents per share, in the prior year period.

The results include a non-cash charge of about $20 million related to the write-down of goodwill and other intangibles associated with the company’s home and children’s gifts business segment. Adjusted for the charge, net income for the quarter totaled $14.9 million, or 23 cents per share.

Quarterly revenue slipped $329.3 million, from $334.2 million in the 2007 period.

Analysts polled by Thomson Reuters, on average, were expecting profit of 33 cents per share, on revenue of $368.6 million revenue.

Revenue fell 15 percent to $97.1 million in its consumer floral segment, but rose 19 percent to $15.2 million in its BloomNet Wire Service unit. Gourmet food and gift baskets revenue jumped 28 percent to $141.9 million, which includes contributions from a unit acquired in April. The home and children’s gift segment saw a 21 percent revenue decline to $77.8 million.

The company attributed the revenue decline to lower consumer spending because of the economy, with particular weakness in the home sector. In addition to the write-down in the home and children’s gift segment, the company said it plans to downsize this business.

Because of the continued weakness in the economy, 1-800-Flowers said it expects revenue for the full fiscal year to fall, and it will accelerate its cost-cutting program. The company said it began laying off 10 percent of its salaried, full-time staff at the beginning of the month, and would reduce its part time workers to keep staffing in line with order volume.

Shares fell sharply in Thursday trading, and one analyst downgraded his rating on the company. Brean Murray Carret & Co. analyst Eric Beder cut his rating on the stock to “Hold” from “Buy” and withdrew his $10 price target, citing the lower-than-expected results for the quarter.

He said the company’s cost-cutting efforts so far have not been enough. “While we had placed our hopes on cost cutting decline in discretionary spending across virtually all the company’s consumer driven business was just too much to overcome, and should be a material drag for the next few quarters,” he wrote in a note to clients. He said the company’s revenue projections for the next fiscal year may be too aggressive.

Shares of 1-800-Flowers.com fell 66 cents, or 17.9 percent, to close at $3.03. The stock has traded between $2.50 and $9.26 in the past 52 weeks.

One comment

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